Stifel Financial, the Missouri-based investment bank known for snapping up regional rivals and Wall Street castoffs, agreed to buy Barclays Plc's U.S. wealth- management business.
Barclays had about 180 financial advisers in the U.S. managing $56 billion in total client assets as of May 31, St. Louis-based Stifel said Monday in a statement that didn't include terms. Barclays had bought the unit with other Lehman Brothers Holdings Inc. operations in 2008 and was faulted by regulators last year for inadequate internal controls there.
Stifel Chief Executive Officer Ron Kruszewski has made more than two dozen acquisitions since taking the helm in 1997, boosting net revenue every year to build one of the largest U.S. securities firms based outside of New York. To complete the Barclays deal, he'll have to convince the financial advisers that they shouldn't leave for other firms, which generally offer bonuses for brokers who can bring their clients.
"We believe that we have proposed an attractive retention package," Kruszewski, 56, said on a conference call, adding that a "significant majority" of Barclays's brokers had expressed interest in joining.
Stifel's targets since the financial crisis have included Sterne Agee Group Inc., KBW Inc. and Thomas Weisel Partners Group Inc. The Barclays deal is expected to be completed in mid- November, the firm said.
Stifel gained 0.3 percent to $57.18 at 9:33 a.m. in New York trading, while Barclays fell 0.9 percent to 263.05 pence in London.
Barclays's wealth-management business manages money for the rich, with its advisers each handling more than $300 million in assets on average. As part of the deal, Barclays agreed to let Stifel's brokers sell some of the stocks and bonds it underwrites in the U.S.
The U.S. Securities and Exchange Commission last year faulted Barclays's stewardship of the U.S. wealth-management unit in the years after the crisis. The bank failed to build a strong compliance infrastructure while integrating the business into its U.S. capital-markets division, the agency said in September.
The SEC fined the division $15 million, finding employees made more than 1,500 transactions for client accounts without providing required written disclosures or getting consent. The Barclays subsidiary, which didn't admit or deny the claims, said at the time that it had cooperated with investigators and strengthened oversight.
"The sale of our U.S. wealth franchise to Stifel represents a good outcome for Barclays and for our clients," Akshaya Bhargava, Barclays's CEO of global wealth and investment management, said in the statement.
The deal would add between $200 million and $325 million in revenue, said Stifel, which will issue between one million and two million shares to pay for the acquisition. Kruszewski declined to give more details during the conference call, saying he would disclose them at a later date.
Stifel's lead financial adviser in the deal was Keefe, Bruyette & Woods Inc., while Bryan Cave LLP provided legal advice.